City Recommends Eastside, South-Central for Federal Funds : Grants: Council report offers strategy for Los Angeles’ application to HUD officials for ‘empowerment zone’ funds.

The Eastside and South-Central would receive the lion’s share of federal “empowerment zone” funds, based on a city report recommending areas to be included in the multimillion-dollar community-development program.

The report, released Thursday at a City Council committee hearing, calls for dividing the 20-square-mile zone into three pieces.

With its combination of $100 million for social programs and tax incentives for businesses in poor areas, the empowerment zone will be the most significant federal community-development program in more than 20 years.

The report was prepared by the Community Development Department to help guide the City Council and mayor’s office in deciding which of the city’s 80 square miles that meet federal poverty guidelines will be part of the empowerment zone application. The application must be submitted by June 30 to the U.S. Department of Housing and Urban Development, which will designate six urban empowerment zones nationwide.

Community leaders whose areas were included were generally pleased at the report’s recommendations.

“I think we scored,” said Frank Villalobos, president of Barrio Planners Inc., one of 19 community groups pushing for a zone on the Eastside.

“All things considered, we’re pleased,” said David Henry, a board member of the Dunbar Economic Development Corp. in South-Central.

The report’s recommendations are far from final. The exact location and sizes of the areas must still be determined by the City Council and the mayor. In what will further complicate the process, the County Board of Supervisors has said it wants unincorporated areas to be included in the city’s application.

Henry and other community leaders had expressed concern that splitting the zone into three pieces could dilute its economic effects. But the money flowing into each community would still be sizable, considering that federal grants for job training and economic development for the entire city totaled about $80 million in the last fiscal year.

Under the Community Development Department proposal, one empowerment zone area would start in Lincoln Heights, extend into the industrial area of Boyle Heights, cross the Los Angeles River and encompass a section of South-Central along the Central Avenue corridor before ending just south of Slauson Avenue.

The second area would encompass the Broadway-Manchester corridor in South-Central, stretch south and include Watts. The third portion would include about two square miles in Pacoima.

The report also recommends that the city apply for five of the 65 HUD-designated “enterprise communities” that will receive $3 million each in federal funds. Among the areas recommended are Pico-Union, Koreatown, Temple Beaudry and portions of South-Central.

Under the empowerment zone program, the city would be allowed to spend the money for programs ranging from child care to job training. Also, businesses in the zone would be eligible to receive tax incentives. They would include payroll tax breaks of as much as 20% of the wages of workers who live in the zone and accelerated depreciation of equipment, enabling owners to write off machinery as a loss as soon as it is purchased instead of the normal five- to seven-year period.

Administration officials, hoping to use Los Angeles as a showpiece of the Clinton urban agenda, have said the city is virtually assured of receiving one of the six empowerment zones.